Why Dave Ramsey And Other Financial Gurus Are Wrong About Gold

Longtime gold bashers are gloating over the precious metal’s recent price slump. Gold prices have declined more than 10% in the first quarter of 2021.

But the perma-bears shouldn’t feel vindicated. After all, anyone who heeded their advice missed out on gold’s record run in 2020 – and on many years of outperformance since 2001.

While gold bugs are often accused of having an unhealthy obsession with the metal, the “anti-gold” bugs reveal a deep-seated bias that can only be explained as irrational or dishonest.

Financial Advisers Don’t Get Fees Recommending Physical Gold

It’s no mystery why many who work in the financial industry hate gold. They are in the business of pushing paper assets, and physical precious metals held outside of bank and brokerage accounts generate no fees for them.

Financial professionals concoct various rationalizations for why gold is a bad investment.

They can certainly point to periods when stocks and bonds have outperformed.

Of course, no one particular asset class can be counted on to generate strong returns every single year.

The whole point of diversification into alternative asset classes including precious metals is to mitigate the risks inherent in an all-paper portfolio. These include inflation risk, interest rate risk, credit risk, counterparty risk, and even political risk.

It’s not just the opinion of bullion dealers that precious metals play a valuable role in investment asset allocation.

It’s the opinion of the respected firm Ibbotson Associates (now part of investment analytic giant Morningstar). Ibbotson found that investors who put 7.1% to 15.7% of their portfolios in precious metals enjoy superior risk-adjusted returns.

DiversifyGold shows virtually no correlation to stocks and bonds, meaning it can rise when paper assets fall. Yet the average investor has nowhere near even the bare minimum suggested by Ibbotson Associates to hedge against risks in financial assets.

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